The pandemic saw a surge in the popularity of pickup-only grocery stores, as consumers sought outlets where they could avoid contact with other people while still getting their orders. However, the rapid return of in-store shopping has posed a significant challenge to companies that aim to continue operating these stores. While e-commerce demand is still strong, it has decreased considerably from early in the pandemic. Brick Meets Click and Mercatus have forecast an annual growth rate of around 12% for e-commerce through 2027, which makes it difficult for sites that are solely dedicated to online ordering to stand out.
Retail giants Walmart and Amazon both opened locations dedicated to online ordering before the pandemic, but the formats didn’t take off, with Walmart closing its two remaining locations, and Amazon closing one of its two Amazon Fresh Pickup locations in Seattle. Startups like Opie and Fresh Street also haven’t fared well, with the former operating only one location despite plans to expand, and the latter shifting to a B2B distribution model.
JackBe, a new pickup-only grocer in San Francisco, touts several features that it says distinguish it from other grocers, including a guarantee that orders will not contain any product substitutions. The startup claimed in early March that 55% of shoppers who placed an order in the store’s first weeks of operation ended up returning. Grocers and online marketplaces like Instacart are taking steps to improve the issue of product substitutions through added transparency and smarter AI-driven product swaps.
However, startups like JackBe and Addie’s, another pickup-only grocer that recently opened in Massachusetts, will have a tough time winning over shoppers used to frequenting mainstream grocers and discount players, especially as inflation-weary shoppers prioritize low prices.